Bitcoin's Price Pullback: Caution Advised Amidst Liquidity Needs

Bitcoin's recent price pullback, amidst broader macroeconomic uncertainty, may not see it rebound to its January 2021 all-time high of $109,000 as quickly as some investors hope. According to CryptoQuant contributor XBTManager, the cryptocurrency is likely to continue consolidating during this pullback phase due to liquidity needs.

XBTManager suggests that long positions in Bitcoin will become viable once short-term holders (those holding for under 155 days) start selling, and long-term holders resume buying. Until then, traders are advised to adopt a risk-averse approach when entering positions in the asset. The analyst warns, "Over the next few months, caution is advised, and highly risky trades should be avoided."

In the days leading up to Bitcoin's $109,000 high on January 20, 2021, short-term holders increased their supply, while long-term holders reduced theirs through selling. This led to a drop of around 100,000 BTC in long-term holder supply over the following 30 days. However, an even larger decline followed in December 2020 when Bitcoin first hit six figures.

Bitcoin's price has since retraced below $100,000 on February 4, 2021, amid fears of a trade war on Trump's promised tariffs. It fell even lower to $85,000 at the February 27, 2021, Wall Street open as markets digested confirmation of new US tariffs. Later that day, the asset plummeted below the crucial $80,000 price level, erasing nearly all the gains made after Trump was elected president on November 5, 2020.

Analysts predict a period of consolidation as the market digests recent gains. According to Trader Tardigrade (@TATrader_Alan), Bitcoin is currently experiencing a bullish pullback, with the consolidation pattern suggesting a continuation of the upward trend. Traders are advised to remain patient as Bitcoin ($BTC) is likely to break out of the consolidation phase and move higher.

On March 4, 2025, Bitcoin (BTC) exhibited a bullish pullback pattern, as indicated by market analyst Trader T